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The purpose of this paper is to uncover the right type of organizational slack for innovation. It examines how city managers conceive slack, and how they create slack to facilitate innovation while dealing with fiscal stress.

The study is built around a comparative case study approach to uncover contrasts, similarities and patterns of slack-building for innovation in austere times. It relies on the experiences of 12 experienced city managers. Data are sought from elite interviews and one focus group.

The main finding is that innovation in the public sector does not benefit from slack in general, but from a specific type of slack. The evidence shows that useful slack for innovation is not so much about financial slack or HR slack, but about psychological slack.

This study adds to the literature that the key questions of slack research should not only focus on identifying the “right amount” of slack but also on identifying of the “right type” of slack.

Public managers who want to deal with (fiscal) crises more innovatively might reconsider their perceptions of slack and its value. Rather than operating on a pure cost effectiveness paradigm, they should balance the costs of slack and its innovative abilities.

This paper highlights the social/psychological side of austerity management. It concludes that increasing the ability of public organizations to innovatively cope with fiscal stress is not so much about increasing predictive capacity or financial buffers, but about increasing the mental leeway of coworkers.

Based on exchange theory and the generalized norm of reciprocity, psychological contracts perceived by employees are believed to have dysfunctional consequences for organizations if breached. This paper aims to study the willingness of employees to report fraud, as such is an important aspect of internal control for organizations.

A 2 × 2 between-subjects experiment was conducted in which 99 participants with diverse accounting backgrounds were first asked questions about their preconceived beliefs (psychological contract) regarding how reports of unethical conduct would be managed, and their reaction if these beliefs were broken (psychological contract violation). Participants were given a hypothetical situation of fraud and then asked to indicate their likelihood of reporting fraud to a supervisor.

The main hypotheses are that employees will be less likely to report fraud when the organization fails to signal the presence of a positive ethical environment or when management reacts weakly to previous reports of unethical activity. The data and findings support these hypotheses. Additional testing also reveals that a psychological contract violation mediates the relationship between the outcome of previous reports and the intention to report fraud.

As with any experimental study, this study’s results come with limitations. Reading an overly simplistic scenario that omits real world details and providing intention to report is very different from actually reporting fraud in one’s own place of employment. Therefore, reporting intentions may vary from actual reporting behavior. Further, reporting motivation (self-defense, altruism, etc.) and concern over retaliation are not measured.

Employees have expectations surrounding ethical corporate environments. Psychological contract violations occur as a result of broken expectations and are common in the workforce. In this study, a breakdown in the internal control environment because of a poor ethical culture, caused an even greater breakdown in internal controls because of employees’ decreased reporting intentions.

Psychological contract violations impact employees’ intention to report fraud. These violations need to be understood so that additional measures and safeguards can be instituted when employees are not acting as a fraud defense or detection mechanism. During such times when there is a breakdown in this type of internal control (that is, when employees might be hesitant to report fraud), extra safeguards against fraud, additional procedures to detect fraud, and enhanced employee training encouraging reporting of suspected unethical conduct, become even more important.

Strong experimental methods provide a rigorous way to evaluate a problem of our day: job insecurity caused by rampant organizational turbulence. The hidden cost is expressed in terms of how less can be expected of employees as a first line of defense against fraud.

This paper aims to examine the relationship between workplace bullying (WPB) and team performance (TP). And it also attempts to investigate the mediating role of team psychological contract breach (TPCB) in the relationship between WPB and TP.

Multiple sources and a time-lagged approach were applied at six-week intervals to 64 work teams across 12 different firms in Turkey to test the hypotheses. A linear regression analysis was conducted to evaluate the association between variables.

The results indicate that WPB leads to negative perceptions of TPCB, which, in turn, have a negative impact on TP.

This study design cannot establish causality, in spite of the fact that the authors used time-lagged data to decrease common method bias.

Managers or team leaders can design activities or programs (i.e. counselling sessions) to promote group cohesiveness, as well as immediately address complaints from team members who feel aggrieved to counteract the negative effects of bullying and reprimand perpetrators; such actions can mitigate perceptions of psychological contract breach.

Few studies have been conducted to test the mediating role of TPCB in the team context. This study stands out as it examines the mediating effect of TPCB in the relationship between WPB and TP. The findings advance the understanding of how WPB could negatively affect TP in a mediation model.

Team-based assignments must be constructed to contribute to the effective development of teamwork skills, an important learning objective for most schools of business. The purpose of this paper is to understand how students view the usefulness of team assignments in order to inform more effective pedagogical techniques related to team-based assignments and the development of student teamwork competencies.

Data were collected from Likert-scale online surveys administered to students upon completion of the first-year team-based introductory business course. Survey items were developed to assess the team-related activities and components in the course and students’ perceived usefulness of team-based assignments. Results from exploratory factor analyses are presented.

Data analyses indicated that survey items contributed to students’ perceived usefulness of team-based assignments. Across three studies, the authors developed a new measure to evaluate effectiveness of team-based assignments.

For those educators who utilize team-based assignments in their courses, this study provides a much needed measure to assess the effectiveness of assignments intended to develop students’ teamwork competencies. The findings also serve to provide evidence of assurance of learning, and evidence of how students are developing in the area of interpersonal skills and abilities to manage interactions that most schools of business and universities deem as essential learning outcomes as a result of Association to Advance Collegiate Schools of Business requirements.

Evidence from online surveys of 755 students in a pilot study and two additional studies conducted longitudinally over a two-year period support a new measure to assess the usefulness of specific team assignments.

The purpose of this study is to investigate how a combination of Normative Commitment (NC) and Instrumental Commitment (IC) affects the creation of budgetary slack when the decision-making mode is individual versus group.

We use 86 students in a two-by-two experimental design (individuals vs. groups and a combination of NC/IC vs. no NC/IC), fully crossed between participants, to examine the combined effects of NC/IC on budgetary slack creation by individuals and group members.

The results show that groups without NC/IC create the highest budgetary slack and differ from the other three experimental cells (groups with NC/IC and individuals with and without NC/IC). In addition, individuals with NC/IC also differ from individuals without NC/IC.

Research limitations are formation of groups, validity threats common to laboratory experiments, and generalizability of the findings. We do not believe these limitations are affecting the results.

As organizations continue to increase the use of group decision-making for setting their budgets, they may want to monitor groups with low NC/IC due to higher slack creation.

Use of groups can impact prosocial behavior via creating a “label” and/or forming social ties in budgeting.

This study extends budgetary slack creation under individuals versus group decision-making, introduces the combined effects of NC/IC as a psychological contract to the accounting literature, and examines the combined NC/IC effect on groups as compared to individuals.

Psychological contracts represent unofficial or informal expectations that an individual holds, most commonly applied to an employer–employee relationship. Understanding psychological contracts helps explain the consequences of unmet expectations, including increased budgetary slack and reduced audit quality. This chapter reviews and synthesizes accounting behavioral research that discusses psychological contracts and that was published in academic and practitioner journals in the areas of financial accounting, management accounting, auditing, taxes, non-profit organizations, accounting education, and the accounting profession itself. Despite the prevalence of psychological contracts in the workplace and the applicability to behavioral research, accounting literature remains limited regarding applications of psychological contracts. This chapter aggregates research across all areas of accounting to provide suggestions for use of psychological contracts in future research and thus create a connected research stream.

This paper uses a laboratory experiment to examine the effect of accountability pressure as a monitoring control tool to mitigate subordinates' propensity to create budgetary slack. The results suggest that budgetary slack is (lowest) highest when accountability pressure is (present) absent under a private information situation. The results further reveal that accountability pressure is positively associated with subordinates' perceived levels of honesty, which in turn is negatively associated with budgetary slack creation. The findings of this paper have important theoretical and practical implications for budgetary control systems design.

Social loafing is a key inhibitor in group-based student learning and is a key challenge in administering group-based assessments in higher education. This study examines differences in the effects of antecedents of social loafing (disruptive behaviour, social disconnectedness and apathy) on work quality by comparing student-created and instructor-created groups. The study also investigates how group members' efforts to “pick up the slack” of social loafers in the two kinds of groups moderate the effect of antecedents of social loafing on work quality.

Post-graduate students from two different sessions of the Marketing Management unit participated in the study: 95 students from session 1 and 90 students from session 2. One session represented student-created groups and the other session represented instructor-created groups. Each group consisted of five students. Partial Least Square (PLS) estimation using SmartPLS was used to assess the direct and interaction effects.

The results indicate differences in the effects of the antecedents of social loafing such as apathy and disruptive behaviour on work quality for both student-created and instructor-created groups. Social disconnectedness was found to have no significant effect on work quality. Interestingly, the study found significant differences in the effects of “pick up the slack” on the work quality of student-created and instructor-created groups. Members of student-created groups who picked up the slack of social loafers improved the work quality for unit assessment. This effect was not significant for instructor-created groups.

Extant literature on social loafing predominantly focusses on its effect on students' work quality and educational achievement. This study contributes to the literature by investigating how the student-created and instructor-created group members' efforts to pick up the slack of social loafers moderate the effects of the antecedents of social loafing on work quality.

The purpose of this paper is to evaluate whether trust and distrust in upper-level managers exert different influences on the budgetary proposals of middle managers. Such proposals involve different levels of managerial effort that impact overall budgetary slack.

This paper is based on a laboratory experiment with 160 business managers.

The results show that the more (less) middle managers trust (distrust) their upper-level managers, the more (the less) effort they commit to budgetary proposals. The authors also find that middle managers with low trust are prone to invest more effort and thus create less budgetary slack than managers with high distrust. The results also show that the introduction of suspicion does not vary this initial choice of effort and budgetary slack.

This paper shows the importance of trust and distrust as informal control systems in organizations. The findings support the importance of extrinsic motivation for enhancing effort and reducing budgetary slack. There are a wide range of exogenous variables that have an effect on the development of trust and distrust.

Practitioners may improve their management control by facilitating trust and preventing distrust in interpersonal relationships because both are informal controls that can reduce and increase, respectively, dysfunctional behaviors in organizations, such as budgetary slack.

This paper is among the first to show the distinct effects of trust and distrust (high and low) in the efforts of middle managers. This study provides a dynamic viewpoint of trust through the introduction of suspicion in a budget negotiation.

Prior experimental budgeting research has focused primarily on individuals’ budget setting and little experimental research has examined budgeting in a group setting. Using a controlled experiment, this study extends prior participative budgeting research by examining the effects of aggregation levels of performance feedback and task interdependence on budgetary slack and the effects of different levels of feedback on group performance in a group participative budget setting.

The results suggest that aggregation levels of performance feedback differentially impact budgetary slack and group performance. Providing both group and individual performance feedback increases group performance and reduces budgetary slack compared to providing group performance feedback only. Providing information about other subordinates’ performance further increases group performance and reduces budgetary slack beyond the effects of providing individual workers information only about their own performance. The results indicate that task interdependence also affects the level of budgetary slack. Specifically, high task interdependence groups created more budgetary slack than did low task interdependence groups.